Philippine Peso Falls After Government Limits Foreign Investment

The Philippine peso fell, after
rallying last month by the most since June, following the
government’s move to curb gains in the currency by limiting
foreign investment. Sovereign bonds declined.

The peso touched the lowest level in almost a week after
the government added real-estate, lending and health care to
industries that are subject to offshore-ownership limits,
Executive Secretary Paquito Ochoa said in a Nov. 2 e-mail. The
central bank has cut its overnight rate four times this year to
temper the appreciation of the peso, which has advanced 6.3
percent in 2012 and touched a four-year high on Oct. 18.

The stronger peso is having “some effect on remittances
and there’s a clamor from exporters,” said Jose Vistan, head of
research at AB Capital Securities Ltd. in Manila. “The peso has
been strong on its fundamentals, and those measures may not stop
more money from coming into the country.”

The peso declined 0.2 percent to 41.238 per dollar from
Oct. 31 in Manila, according to data from Tullett Prebon Plc. It
touched 41.265 earlier, the weakest level since Oct. 30.
Financial markets were closed on Nov. 1 and Nov. 2 for holidays.
One-month implied volatility, a measure of exchange-rate swings
used to price options, was unchanged at 5 percent, according to
data compiled by Bloomberg.

Foreign investors have pumped almost $2 billion into
Philippine stocks this year, exchange data show, helping drive a
25 percent surge in the benchmark index. A government report
tomorrow may show inflation slowed to an annual rate of 3.5
percent in October from 3.6 percent in September, according to
the median estimate in a Bloomberg survey of economists.

The yield on the 5.375 percent notes due March 2027 climbed
more than two basis points, or 0.02 percentage point, to 5.35
percent, according to Tradition Financial Services. The treasury
will offer 9 billion pesos ($218 million) of five-year
securities tomorrow, according to its sales calendar.